Petrobras' Indian partners fight delay in troubled Brazil oil project

RIO DE JANEIRO/NEW DELHI, July 4 (Reuters) - Petrobras has
warned its Indian partners in a huge offshore project to not
expect oil from the site until 2022, according to sources, a
fresh sign of how low oil prices and the state-owned company's
corruption scandal and mountain of debt are dragging on Brazil's
energy industry.

The previously unreported, four-year delay in the
"super-giant" discovery off the northeastern coast of the
Brazilian state of Sergipe is forcing India's Oil and Natural
Gas Corp and IBV Brasil Petroleo Ltd to seek ways to
speed up the Petrobras-led project which has cost them $2.1
billion with no return in sight.

The delay and pressure from the Indian partners is just one
of many challenges for new Petrobras Chief Executive Pedro
Parente, named by Brazil's interim-President Michel Temer in
late May amid an ongoing financial crisis.

In the face of a massive bribery and kickback scandal and
Petrobras' $126 billion of debt, Parente has pledged to run the
company in a more market-friendly way but has declined to
comment on individual projects. He has also promised a revamped
investment plan by the end of October - though it is unclear
whether it will address the Sergipe offshore standoff.

In April, Petrobras told IBV, a 50-50 joint venture between
state-owned Bharat Petroleum Corp and privately held
Videocon Industries Inc, that there will be no oil
output from Sergipe "until at least 2022," an IBV executive told
Reuters. A year ago, Petrobras' promised first oil by 2018.

Hoping to speed up development, IBV told Reuters it has
offered to arrange up to $10 billion in loans from Indian and
other international development banks to finance the Sergipe
development - Brazil's biggest oil prospect outside the prolific
subsalt region near Rio de Janeiro where Brazil is pinning hopes
of energy independence.

"It's a common and simple loan structure, if Petrobras is
willing to provide future output as collateral, it won't have to
pay a penny until oil starts flowing, something we could can
probably do by 2020," the IBV executive said.

"But we get the feeling that Petrobras has yet to accept its
new, more restricted circumstances," the executive added.
Continued...